from the it's-something dept

For a few years now, the FTC has talked about taking on patent trolls. In 2011, 2012 and 2013, we heard stories about the FTC putting patent trolls "on notice" and getting ready to crack down on them for deceptive practices. Last year, it finally "launched an investigation" into certain patent trolls, starting with notoriously crazy patent troll MPHJ, famous for its rather aggressive form of trolling, using a questionable patent on "scan-to-email" technology, sending out thousands of demand letters from a range of shell companies, telling lots of small businesses that they had to pay between $900 to $1200 per employee if they had a scanner with the "scan-to-email" function (most modern scanners).

Unfortunately, the "settlement" seems fairly weak. There's no money being paid. There's no admission of guilt. There's just a promise that MPHJ won't use certain deceptive tactics, such as claiming that others had already paid thousands of dollars for licenses, or threaten lawsuits unless the company is actually going to sue. It seems like a pretty minor slap on the wrist, getting at some of the worst behavior by MPHJ, but hardly doing much to stop lots of other egregious trolling actions. It's something, but a very minor something.

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Worse than before

It seems like a pretty minor slap on the wrist, getting at some of the worst behavior by MPHJ, but hardly doing much to stop lots of other egregious trolling actions. It's something, but a very minor something.

Actually I'd say such a result leaves the matter even worse than before. If a company can get away with such blatantly ridiculous tactics with nothing more than a moderately stern warning not to do it again, what message exactly does that send to other patent trolls? 'The FTC is cracking down on patent trolls, get out intact while you can', or 'The FTC doesn't care about patent trolling, continue on as normal'?

Before this there was at least a minor worry that if they got to be too blatant in their shakedowns, someone in the government might bring the hammer down. Now though? The FTC have just shown themselves to be toothless in the matter, unwilling to actually levy any sort of fine or punishment, so now nothing is holding them back.

Well, it does give the FTC unambiguous grounds for future fines. Whether or not MPHJ would agree that the things it has agreed to stop doing were illegal or governable by the FTC, they have now consented to the FTC being able to fine them $16,000 per violation from this point forward. Including for threatening lawsuits that they don't intend. Given that a blizzard of threatened lawsuits that they have no interest in pursuing is part of the definition of trolling in this context, that seems significant to me.